NBC Expense Probe Widens

In its March 29 editions, The Washington Post Reported that attorney Patrick Moran believed that John Cox, his client in the NBC expense account scandal, has been set up by others at NBC, Moran said that while he believes his client was "set up," he could not say that NBC employes necessarily were involved.

By Nancy L. RossBy Nancy L. RossMarch 29, 1979

The first person charged in the growing National Broadcasting Company expense account scandal pleaded guilty yesterday in U.S District Court to defrauding the network of $4,800. John Cox, 34, a former employe of NBC's Washington bureau, could be sentenced to a maximum of five Years in prison and a $1,000 fine for fraud.

Meanwhile, two more employes have resigned in the past fortnight, bringing to at least eight the number of those who have either quit or been fired in connection with alleged kickbacks, bogus companies, falsified vouchers and other schemes that are believed to have lasted a decade and cost the network as much as $1 million. The money is supposed to have been used for personal entertaining and gifts, even the landscaping of one employe's garden.

Large sums of cash with apparently little auditing control were routinely handled by NBC's unit managers, who make logistical arrangements for camera teams on location. (Like the other networks, NBC has recently begun to use corporate credit cards to tighten up its accounting.) Cash was also allegedly when necessary to facilitate NBC's operations in the U.S. andforeign countries. Some unit managers have privately protested that falsifying some vouchers was the only way they could get their bribes reimbursed by NBC.

A former secretary with NBC in New York called cheating on expense accounts "rampant." She said she had seen her boss's expense accounts for fictitious lunches that came to more than her weekly salary. And she added, "We used to hear that they were getting away with bigger stuff in Washington."

The scandal broke here when Executive World Travel, a division of the Marriott Corp., discovered that NBC unit managers were charging large numbers of air tickets, then returning the unused tickets with instructions to make refunds to their personal accounts.Cox, who worked for NBC for 10 years, the last five of them as a unit manager, was responsible for the production of certain television shows. He pleaded guilty to a single count of fraud. When asked in an interview whey he decided to acdept the arrangement, Cox replied, "I'd just like to get things over with, so I can make future plans."

During the course of the investigation by U.S. Attorney Harry Benner, it was revealed that Cox had carried a briefcase with $38,000 in cash last September to Rome at the time NBC covered the papal investiture. The money was stolen from his hotel and never recovered. Cox's lawyer, Patrick Moran, contends that a lie detector test exonerated his client. He alleged that Cox may have been "set up" by other NBC unit managers involved in fraud because so many knew he was carrying the cash.

Cox was charged with having disverted funds "in concert with John Walsh and Carlyle Robinson." Walsh was Cox's boss; and Robinson, another unit manager. Both are said to be making plea bargaining arragements.

According to informed sources, Walsh, Who was fired last fall, had accounts at several restaurants where he entertained female acquaintances. The only restaurant identified by all three sources was Intrigue, an out-of-the-way, candlelit restaurant on the ground floor of the Intrigue Hotel in Foggy Bottom. At the end of each month, Walsh is alleged to have asked the restaurants for blank invoices. He would then fill in bogus business activities and submit them to NBC for payment. A source said, "I recall seeing one monthly bill for $480."

Jacob Stein, the Intrigue's lawyer, said the restaurant did not make a practice of giving out blank vouchers. Asked specifically whether Walsh had asked for or received any blanks, Stein refused to comment. He added, "We don't want to add to the controversy involving Mr. Walsh."

On one occasion, Walsh is alleged to have submitted a phony bill for a van rental from a dealer and soon thereafter to have gotten a new Pontiac. In addition to selling charged airline ticket for cash, Walsh is said to have received a $108000 "booster" from the agency, which finally alerted NBC that at least $50,000 had been refunded into employes' personal accounts. Walsh referred questions to his attorney, James Treeese, who refused any comment.

Last week, Thomas Miles, a set designer for WRC-TV, NBC's affiliate here, resigned. According to informed sources, Miles allegedly formed a fictitious company to pack and ship NBC equipment with the approval of Walsh who received kickbacks. Miles would then submit bills to NBC from the phony firm. In reality, the packing and shipping were done by NBC employes.Miles is also said to have used chairs and barstools, stamped PROPERTY OF NBC, in a restaurant he started in Fairfax.

Miles' attorney, Fred Sinclair, denied that NBC personnel were used to work for a bogus company, or that any NBC equipment found its way permanently into the restaurant, which has since gone bankrupt. He said an NBC carpenter who worked for Miles' restaurant did so on his lunch hour. Sinclair had no comment on charges that Miles may have received kickbacks on supplies he ordered. He said Miles "doesn't know whether he will cut a deal (plea bargain with the U.S. Attorney) or not."

The first two to be fired in New York were Stephen Weston, a vice president in charge of unit managers, and his deputy, William Aulepp. Weston has denied any wrongdoing.Aulepp has told the press he knew nothing of what allegedly went on. Neither could be reached yesterday.

Two weeks ago, Richard Knapp, unit manager for sports in New York, resigned. It is alleged that when camera teams were sent to some major sporting events, NBC was charged for nonexistent security guards and inflated technician's bills. For example, NBC would be billed $500 for an electrician who was hired locally for $150.